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TRAVERSE CITY, MI – General Motors Corp. adds battery developer A123Systems Inc. to a roster of suppliers working on its E-Flex electric drive system, a development the auto maker says could put it ahead of rival Toyota Motor Corp. in the race for next-generation alternative-vehicle technology.

Toyota, which leveraged its successful Prius hybrid to the forefront of alternative vehicles, reportedly will postpone the arrival of new high-mileage hybrids due to safety concerns over its Li-ion battery technology. The Japanese auto maker currently uses a less-robust nickel-metal-hydride battery on its hybrids and planned to move to a lithium-cobalt-oxide-based chemistry with its new lineup.

So far this year, Toyota has sold 110,565 Priuses, accounting for 51.4% of a hybrid vehicle market that’s currently 214,983 units strong, according to Ward’s data. By comparison, GM has sold 4,414 units of its top model, the mild-hybrid Saturn Vue Green Line.

“It very definitely opens a window of opportunity for us to be first to market with a genuine plug-in hybrid and first to market with a pure electric vehicle with a small, range-extending, emergency piston-engine powerplant as represented by the (Chevrolet) Volt,” Lutz tells reporters at the Management Briefing Seminars here.

Unveiled at the North American International Auto Show in Detroit earlier this year, the Volt combines electric power with a 1.0L, 3-cyl. turbocharged engine. When electric power wanes, the engine, which can burn gasoline or alternative fuels, kicks in to generate power for the electric motor.

GM calls the system E-Flex and plans to roll it out on a number of vehicle platforms capable of utilizing various fuel/power sources, such as biofuel, hydrogen fuel cell or even directly from the power grid in the case of a pure plug-in electric vehicle.

GM says the Volt series hybrid can achieve 150 mpg (1.56 L/100 km) but has an electric-power range of just 40 miles (64 km). And although GM wants to bring the car to market by 2009, cost issues remain.

The auto maker hopes A123Systems, which cut its teeth on power-tool applications and ranks as the world’s largest producer of batteries with nanophosphate chemistry, will solve that dilemma.

A123Systems CEO Dave Vieau says his company’s batteries degrade slower than others and could provide a range of at least 40 miles until the end of the vehicle’s life. It would achieve that without “over-sizing” the batteries, a technique many other developers use to achieve longer battery life.

“The work of the next 18 months is configuring that in the vehicles,” he says.

The present timetable calls for GM and A123Systems to deliver a battery pack by October, a mule by the end of the year and a full-running vehicle by next spring. Accounting for activities such as cold-weather testing, crash testing and cycling exercises, Lutz expects GM to be ready with a marketable vehicle utilizing nanophosphate chemistry by the end of 2010.

Vieau also says A123Systems batteries are less expensive because they use fewer precious metals and the raw materials required are abundant.

“We have some room for price reduction,” he says.

A123Systems joins two other suppliers recruited by GM to work separately on complete battery packs incorporating multiple Li-ion cells: Compact Power Inc., a subsidiary of LG Chem, and Continental Automotive Systems, a division of Continental AG.

Continental will leverage the technology pursued by GM and A123Systems.

“We’re confident one, or possibly both, of these companies’ solutions will meet our battery requirements for the E-Flex system,” Denise Gray, director of GM’s energy storage devices and strategies, says in a statement.

Lutz, however, stops short of declaring victory on alternative powertrains.

“Never discount Toyota,” he says. “They’re extremely smart people. They know the path they are on with their current lithium chemistry didn’t work, and they will shift very quickly to another chemistry.

“I don’t count them out of the race at all,” Lutz adds. “We’re certainly not gloating at this point.

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